Page 383 - Auditing Standards

As of December 15, 2017

.02 One of the auditor's responsibilities in an audit conducted in accordance with the standards of the
PCAOB is to obtain sufficient appropriate evidential matter to provide a reasonable basis for the opinion on
the entity's financial statements. In fulfilling this responsibility, the auditor maintains independence from the

entity. 2

.03 Internal auditors are responsible for providing analyses, evaluations, assurances,

recommendations, and other information to the entity's management and board of directors or to others with
equivalent authority and responsibility. To fulfill this responsibility, internal auditors maintain objectivity with
respect to the activity being audited.

Obtaining an Understanding of the Internal Audit Function

.04 An important responsibility of the internal audit function is to monitor the performance of an entity's
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controls. When obtaining an understanding of internal control, the auditor should obtain an understanding of
the internal audit function sufficient to identify those internal audit activities that are relevant to planning the
audit. The extent of the procedures necessary to obtain this understanding will vary, depending on the nature
of those activities.

.05 The auditor ordinarily should make inquiries of appropriate management and internal audit
personnel about the internal auditors'—

a. Organizational status within the entity.

b. Application of professional standards (see paragraph .11).

c. Audit plan, including the nature, timing, and extent of audit work.

d. Access to records and whether there are limitations on the scope of their activities.

In addition, the auditor might inquire about the internal audit function's charter, mission statement, or similar
directive from management or the board of directors. This inquiry will normally provide information about the
goals and objectives established for the internal audit function.

.06 Certain internal audit activities may not be relevant to an audit of the entity's financial statements.
For example, the internal auditors' procedures to evaluate the efficiency of certain management decision-

making processes are ordinarily not relevant to a financial statement audit.

.07 Relevant activities are those that provide evidence about the design and effectiveness of controls
that pertain to the entity's ability to initiate, record, process, and report financial data consistent with the

assertions embodied in the financial statements or that provide direct evidence about potential misstatements

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